• Quality: Is it the plan or is it the docs?

    I posted earlier on quality ratings of Medicare Advantage plans and on whether financial incentives work in health care. Let’s see if I can tie those together with a little help from The Relationship between Health Plan Performance Measures and Physician Network Overlap: Implications for Measuring Plan Quality, by Maeng et al. (HSR, 2010).

    Plan control over quality is limited. Typical measures of health plan performance include process measures that likely reflect physician practice style and behavior. […]

    Instead, provider-oriented structures, such as accountable care organizations (ACOs) or medical homes, where the primary responsibility of delivering high-quality care is assumed to rest with the providers, may constitute a step in the right direction toward the goal of creating more meaningful quality metrics. […]

    Our results suggest that when there is overlap in health plans’ physician provider networks, plan performance scores converge, generally resulting in lower values as physicians contract with multiple plans. We hypothesize that plans have less of an incentive to invest in quality when overlap is high, because returns to this investment may accrue to competing plans as well. Additionally, the investment required to improve quality may be larger when physicians are not exclusively affiliated with a single plan.

    Though the authors don’t quite say it, their results imply that the trend toward unification care provision and insurance risk (embodied by the ACO movement) is a means of aligning practice-sensitive performance measures within plan incentives. In other words, if the integrated provider network (or ACO) is the plan, then physician performance measurement is plan performance measurement. If the plan employs the doctors, it doesn’t look good unless the doctors look good.

    As the authors suggest, pointing to Scanlon et al. (2000), a plan such as this would have the incentive and the means to manage care and implement quality improvement, provided it was paid for such things. The investment would be worth it to the plan since the improved quality of the plan’s physicians would not spill over to competitors. Such a plan would care whether financial incentives work in health care. Such a plan could very well be a Medicare Advantage plan, some of which are integrated with health care providers.

    Right now, to the extent Medicare Advantage plans’ provider networks overlap, the plans’ quality ratings may not be that meaningful. As plan-provider vertical integration continues, that may change.


    Scanlon, D. P., E. Rolph, C. Darby, and H. E. Doty. 2000. ‘‘Are Managed Care Plans Organized for Quality?’’ Medicare Care Research and Review 57 (2): 9–32.


    • Sometimes it’s odd to see something in social science/economics presented as a theory to be investigated solely by quantitative means. People who have worked in managed care for a while in a strategic capacity (I was one) can confirm that health plans are quite aware of the importance of network overlap and its impact on incentives to invest in improving provider performance. The plans with exclusive networks have been investing in their networks not just to adopt quality best-practices, but also in the infrastructure, particularly EHRs, to enable it. This becomes part of their advertising. Ask them about how important it is to them.

      On the other side, I have experienced frustration many times trying to get a plan with lots of network overlap (typical physician did less than 25% of business with the insurer) to fund investments in EHRs,HIE, etc. Such plans will still invest in HEDIS-related quality measures but much of this investment centers on getting better reporting on performance so that the plan gets full credit for procedures that were done.

      I’m not at all saying the numbers don’t matter. They certainly do, and it could turn out that the investments of the staff model HMOs don’t make them higher quality than overlapping network HMOs. But it’s still weird to use only secondary resources for data and not ask the participants if they are aware of the incentives and directing corporate strategy accordingly.

      • Of course there is ample room for and value of qualitative research. Not every project can undertake it. Perhaps what you are suggesting has been done. If not, I agree it should be, though I can imagine barriers (time, cost, proprietary considerations, lack of access/response, etc.).